PharMerica Reports Results for the Fourth Quarter of 2012 and Year Ended December 31, 2012

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PharMerica Reports Results for the Fourth Quarter of 2012 and Year Ended December 31, 2012

Full Year Adjusted EBITDA Increases 5.7%


Full Year Adjusted Diluted Earnings Per Share Increases 5.8%

Full Year Adjusted EBITDA Margin Increases to 5.7%

Company Announces 2013 Earnings Guidance

LOUISVILLE, Ky.--(BUSINESS WIRE)-- PharMerica Corporation (NYS: PMC) , a national provider of institutional pharmacy, specialty infusion services, and hospital pharmacy management services, today reported its financial results for the fourth quarter of 2012 and year ended December 31, 2012.

Commenting on the Company's results, Gregory S. Weishar, PharMerica Corporation's Chief Executive Officer, said, "PharMerica's solid performance in the fourth quarter and full year demonstrates accelerating financial and operating momentum. Operating profits and gross margins improved due to increased generic dispensing. Over 85% of our prescriptions are now dispensed generically. We also saw improved bed retention. Customer and client satisfaction levels are at all time highs as we benefit from the organization's focus on the customer and strategic investments in service technologies. Today, PharMerica's service levels are better than they have been in over a decade.

"Looking forward, we enter 2013 well positioned to capitalize on industry demand. We have strengthened the sales and service team. We have improved purchasing terms. We have solidified operations. And, we have unique products and services that save our clients money. All of this leads to a stronger market presence. We are fast approaching the point where we will achieve the goal of organic growth in LTC services.

"We are also optimistic that we can grow Amerita, our most recent acquisition. Amerita is a leading regional supplier of specialty infusion services. Amerita extends the Company's market reach into the home, a strategic imperative, as we see a significant segment of the senior population aging in their home. There are meaningful operating and market synergies between the infusion and LTC operating segments, and we are confident that Amerita will emerge as a national player in the home infusion industry and position PharMerica Corporation to serve an expanded senior population."

The results for the fourth quarter and year are set forth below:

  • Key Comparisons of Years Ended December 31, 2012 and 2011:
  • Adjusted EBITDA for the year ended December 31, 2012, was $104.1 million compared with $98.5 million for 2011, an increase of 5.7%.
  • Cash flows provided by operating activities were $85.7 million compared with $26.8 million in the same period of 2011, an increase of 220%.
  • Gross profit for the year ended December 31, 2012, was $300.2 million compared with $294.9 million in 2011. Gross margin expanded 220 basis points to 16.4% for the year ended December 31, 2012, compared with 14.2% for the year ended December 31, 2011. The increase in gross margin was primarily a result of the generic dispensing rate increasing 370 basis points to 83.3% for the year ended December 31, 2012, compared with 79.6% for 2011.
  • Net income for the year ended December 31, 2012, was $22.9 million, or $0.77 diluted earnings per share, compared with $23.4 million, or $0.79 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $1.27 for the year ended 2012 compared with $1.20 diluted earnings per share for 2011, an increase of 5.8%.
  • Revenues for the year ended December 31, 2012, were $1,832.6 million compared with $2,081.1 million for the same period of 2011, a decrease of 11.9%, driven in part by higher generic dispensing.
  • Key Comparisons of Fourth Quarters Ended December 31, 2012 and 2011:
  • Adjusted EBITDA for the fourth quarter of 2012 was $27.4 million compared with $27.6 million in the fourth quarter of 2011, a decrease of 0.7%.
  • Cash flows used in operating activities for the fourth quarter of 2012 were $17.5 million compared with cash flows provided by operating activities of $14.5 million in the fourth quarter of 2011. Cash flows in the fourth quarter were negatively impacted by higher levels of inventory purchasing, the impact of Hurricane Sandy and an increase in taxes paid.
  • Gross profit for the fourth quarter of 2012 was $75.6 million compared with $76.2 million in the fourth quarter of 2011. Gross margin expanded 210 basis points to 17.5% in the fourth quarter of 2012 compared with 15.4% in the fourth quarter of 2011. The increase in gross margin was a result of the generic dispensing rate increasing 480 basis points to 84.8% in the fourth quarter of 2012 compared with 80.0% in the fourth quarter of 2011.
  • Net income for the fourth quarter of 2012 was $3.7 million, or $0.12 diluted earnings per share, compared with $7.9 million, or $0.27 diluted earnings per share, for the same period in 2011. Adjusted diluted earnings per share were $0.33 in 2012 compared with $0.35 diluted earnings per share in 2011, a decrease of 5.7%.
  • Revenues for the fourth quarter of 2012 were $433.2 million compared with $495.6 million for the fourth quarter of 2011, a decrease of 12.6%, driven in part by higher generic dispensing.

Fiscal 2013 Earnings Guidance

The Company announced its fiscal 2013 earnings guidance range as follows:

(In millions, except per share data) Ranges
Revenues$1,567.0 - $1,694.0
Adjusted EBITDA*$113.2 - $121.2
Stock-based compensation and deferred compensation$7.2
Depreciation and amortization expense$32.0
Interest expense, net$11.8
Tax rate40.1%
Net income$37.3 - $42.0
Adjusted diluted earnings per share*$1.39 - $1.55
Common and common equivalent shares outstanding29.9

*Adjusted EBITDA and adjusted diluted earnings per share include an add back for expected expenses incurred related to stock-based compensation and deferred compensation, which has not historically been a part of Adjusted EBITDA and adjusted diluted earnings per share. Such amount is approximately $4.3 million (pre-tax $7.2 million), or $0.14 diluted earnings per share. See the supplemental information schedules at the end of this press release for recasted historical information under this definition.

As is normal practice, the fiscal 2013 earnings guidance does not consider any benefits from future acquisitions nor does it consider any merger, acquisition, integration costs and other charges the Company may incur, including but not limited to the application of new accounting pronouncements or other non-recurring charges, including the impact of Hurricane Sandy. Also, the guidance does not consider the potential impact of the expected conversion to Average Manufacturers Price ("AMP") because the effect of these items cannot be reasonably estimated at this time.

Conference Call

Management will hold a conference call to review the financial results for the fourth quarter and year ended December 31, 2012, on February 8, 2013, at 10:00 a.m. Eastern Time. To access the live webcast, visit the Investor Relations section of the Company's website at www.pharmerica.com or go to www.earnings.com. To access a telephonic replay of the call, which will be available one hour after the conclusion of the call through February 22, 2013, please dial 1-888-286-8010 (617-801-6888 if calling from outside the U.S.) and use passcode 58304162.

About PharMerica

PharMerica Corporation is a leading institutional pharmacy services company that services healthcare facilities in the United States, provides pharmacy management services to hospitals, and also provides specialty infusion services to patients outside a hospital setting. As of December 31, 2012, PharMerica operated 91 institutional pharmacies and 12 specialty infusion centers in 45 states. PharMerica's customers are institutional healthcare providers, such as skilled nursing facilities, nursing centers, assisted living facilities, hospitals, individuals receiving in home care and other long-term alternative care providers. The Company also provides pharmacy management services to long-term care hospitals.

Forward-looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company's current estimates, expectations and projections about its future results, performance, prospects and opportunities.Forward-looking statements include, among other matters, the information concerning the Company's "guidance" and possible future results of operations, the strength of the Company's financial performance during 2013, the impact of the brand to generic drug conversions on the Company, the Company's ability to identify and consummate future acquisitions, the Company's ability to deliver outstanding value to its shareholders, the Company's plan to accelerate the rollout of on-site dispensing technology and cost containment products, the Company's continued pursuit of its strategic initiatives including those focused on client retention and operating margins, the Company's ability to grow the Amerita specialty infusion services business, the Company's ability to capitalize on the operating and marketing synergies between the infusion and LTC operating segments, the Company's ability to position itself to serve an expanded senior population, and the Company's ability to achieve organic growth in LTC services.Forward-looking statements include statements that are not historical facts and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "plan," "may," "should," "will," "would," "project" and similar expressions.These forward-looking statements are based upon information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause the Company's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.Important factors that could cause the Company's actual results to differ materially from the results referred to in the forward-looking statements we make in this press release are included in the Risk Factors section set forth in the Company's Annual Report on Form 10-K filed with the SEC and in other reports, including Quarterly Reports on Form 10-Q filed with the SEC by the Company.

You are cautioned not to place undue reliance on any forward-looking statements, all of which speak only as of the date of this press release.Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.All subsequent written and oral forward-looking statements attributable to us or any person acting on the Company's behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this press release and in the Risk Factors section set forth in the Company's Annual Report on Form 10-K filed with the SEC and in other reports filed with the SEC by the Company.

 

PHARMERICA CORPORATION

CONSOLIDATED INCOME STATEMENTS

(In millions, except share and per share amounts)

  
Three Months Ended December 31,Year Ended December 31,
2011  2012 2011  2012 
Amount 

% of
Revenue

Amount 

% of
Revenue

Amount 

% of
Revenue

Amount 

% of
Revenue

Revenues$495.6100.0%$433.2100.0%$2,081.1100.0%$1,832.6100.0%
 
Cost of goods sold 419.484.6  357.682.5  1,786.285.8  1,532.483.6 
 
Gross profit76.215.475.617.5294.914.2300.216.4
 
Selling, general and administrative expenses53.810.952.912.2216.510.4214.711.7
 
Amortization expense2.60.53.30.811.00.512.30.7
 
Impairment of intangible assets----5.10.3--
 
Merger, acquisition, integration costs and other charges3.70.75.61.315.30.819.91.1
 
Hurricane Sandy disaster costs --  4.51.0  --  4.50.2 
 
Operating income16.13.39.32.247.02.248.82.7
 
Interest expense, net 2.50.5  2.40.6  8.80.4  10.00.6 
 
Income before income taxes13.62.86.91.638.21.838.82.1
 
Provision for

income taxes

 5.71.2  3.20.7  14.80.7  15.90.9 
 
Net income$7.91.6%$3.70.9%$23.41.1%$22.91.2%
 Three Months Ended

December 31,

 Year Ended

December 31,

 2011  2012 2011  2012
Earnings per common share:
Basic$0.27$0.13$0.80$0.78
Diluted$0.27$0.12$0.79$0.77
 
Shares used in computing earnings per common share:
Basic29,399,97829,475,48929,343,22129,471,734
Diluted29,638,29629,988,34229,468,45229,901,896
 

PHARMERICA CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts)

  
(As Adjusted)

Dec. 31,
2011

Dec. 31,
2012

 
ASSETS
Current assets:
Cash and cash equivalents$17.4$12.3
Accounts receivable, net232.2206.5
Inventory130.6135.7
Deferred tax assets, net36.536.7
Prepaids and other assets 34.5  38.6 
 451.2  429.8 
 
Equipment and leasehold improvements145.0158.8
Accumulated depreciation (92.6) (105.7)
 52.4  53.1 
 
Deferred tax assets, net0.6-
Goodwill214.9268.2
Intangible assets, net100.2121.9
Other 14.7  12.7 
$834.0 $885.7 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$54.7$49.2
Salaries, wages and other compensation35.135.8
Current portion of long-term debt6.312.5
Other accrued liabilities 6.7  9.0 
 102.8  106.5 
 
Long-term debt293.7303.0
Other long-term liabilities23.722.5
Deferred tax liability-11.1
Commitments and contingencies (see Note 6)
 
Stockholders' equity:

Preferred stock, $0.01 par value per share; 1,000,000 shares authorized and no shares issued at December 31, 2011, and December 31, 2012

 

--

Common stock, $0.01 par value per share; 175,000,000 shares authorized; 30,794,000 and 30,943,748 shares issued as of December 31, 2011, and December 31, 2012, respectively

 

0.30.3
Capital in excess of par value355.9363.0
Retained earnings68.491.3

Treasury stock at cost, 1,350,128 shares and 1,456,293 shares at December 31, 2011, and December 31, 2012, respectively

 

 (10.8) (12.0)
 413.8  442.6 
$834.0  Read Full Story

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